061205en03004

	news.gov.hk
	From Hong Kong's Information Services Department

December 5, 2006

Tax

Gov't to look beyond GST: Henry Tang

As people have reservations over the goods and services tax proposal, the Government will not advocate it as the only option in solving the narrow tax-base problem in the second part of the tax-reform consultation.

This was the message today from Financial Secretary Henry Tang, who said the Government has so far received 2,200 submissions on the consultation.

Pragmatic move: Financial Secretary Henry Tang announces that the Government will not advocate GST as the only option to solve the narrow tax-base problem, and Chief Executive Donald Tsang backs his decision.

Differing views

The public has two clear but differing views, he said, with the majority of them understanding that the tax base is narrow and the problem needs to be addressed. However, they do not consider GST an appropriate solution.

"Although the public understands that GST can broaden our tax base, it is clear from the views collected that we have not been able to convince the community to accept GST as the main option to address the tax-base problem," he said.

"We accept that at this time there is insufficient public support, nor are the conditions right, for introducing GST."

The Government will publicise the other options recommended in the 2002 tax-reform report and encourage the public to offer feedback.

Decision backed

Chief Executive Donald Tsang said he and Executive Council members support Mr Tang's decision.

"We believe the decision he has made respects fully the wishes of Hong Kong people that we should seriously consider widening our tax base. At the same time he has paid full regard to the strong opposition of the people to the introduction of GST at this time.

"I have all along emphasised the importance of gaining sufficient public support in formulating public policy, so the way that the Financial Secretary has proposed to do it is in accordance with that view and it is certainly a pragmatic way of going forward. It deserves all public support."